Tanzanian government has announced that from the 1st of October 2022, it would end transfer fees on cash withdrawals through bank agents and ATMs for Tsh 30,000 or $12.81 and lesser.
Why it matters
The government is incorporating this policy into the financial services provided by banks to encourage Tanzanians to once again use mobile money services, following earlier complaints that mobile money levies had become too expensive.
Back in June 2021, Tanzania’s government imposed a transfer fee of between Tsh10 ($0.0043) and Tsh10,000 ($4) on mobile money transactions, depending on the amount sent and withdrawn.
The expected revenue was to partly finance the Tsh36.68 trillion 2021/2022 budget ($15 billion); a budget which entailed plans to fund social projects and construct health centers and classrooms. Tanzania’s government projected a revenue of Tsh1.254 trillion ($500 million) from the levies.
The imposed levies backfired after Tanzanians shunned mobile phone transactions and online purchases and began making cash payments. However, the country’s Finance Minister Mwigulu Nchemba stated they collected about Tsh63 billion ($28 million) in bank charges.
In foregoing the expected revenue from bank charges, the Tanzanian government is cutting expenses spent on conferences, training, refreshments, and trips to generate funds.
What you should know
As of 2021, mobile money transactions in Tanzania were $54.5 billion. Experts say if citizens return to using the service in 2022, the East African country can grow its mobile money market to $120.4 billion by 2027.
Other African countries, including Uganda, Cameroon, and Zimbabwe, have implemented the bank charges being annulled in Tanzania.